Starting December 21, 2022, mortgagors can purchase private flood insurance on FHA-insured mortgages for properties located in Special Flood Hazard Areas (SFHAs).
This announcement from the Federal Housing Administration (FHA) is good news for homeowners with properties in Federal Emergency Management Agency (FEMA)-designated SFHAs. For the first time, mortgagors will now be able to purchase private flood insurance which may be less expensive and/or provide enhanced coverage. Previously, only flood insurance obtained through the National Flood Insurance Program (NFIP) was permissible for FHA-insured mortgages – which limited choices for consumers. In this current mortgage environment of higher rates and home prices, this rule change allows homeowners to purchase:
- Private Flood Insurance policies, which can be 70% less expensive than the FEMA regulated flood insurance
- Private Flood Insurance policies, which tend to cover more than a FEMA regulated flood insurance policy
In addition, as part of its implementation, as of December 21, 2022, the FHA will require lenders to provide detailed flood insurance coverage information when electronically submitting mortgages for FHA insurance on properties in SFHAs.
What LG Risk Management Can Do for You
Contact Louis Blangiardo or call 631-589-6960 today about flood insurance solutions for you or your clients. We can develop a customized plan that helps protect the homeowner and the property.